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| Greece Made Preparations to Exit Euro | Greece Made Preparations to Exit Euro |
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| FRANKFURT — Already split by internal conflict, Greece’s leftist government came under further pressure on Monday following the release of a recording in which the former finance minister described a secret plan to leave the euro. | FRANKFURT — Already split by internal conflict, Greece’s leftist government came under further pressure on Monday following the release of a recording in which the former finance minister described a secret plan to leave the euro. |
| The preparations for an alternative banking system and currency began before the current leaders came to power in January, the former finance minister Yanis Varoufakis said in a July 16 interview with an influential investment organization. Alexis Tsipras, leader of the Syriza party and now prime minister, authorized the preparations but ultimately did not allow them to be put into action, Mr. Varoufakis said. | The preparations for an alternative banking system and currency began before the current leaders came to power in January, the former finance minister Yanis Varoufakis said in a July 16 interview with an influential investment organization. Alexis Tsipras, leader of the Syriza party and now prime minister, authorized the preparations but ultimately did not allow them to be put into action, Mr. Varoufakis said. |
| Publication of the recording, whose contents were reported by the Greek daily newspaper Kathimerini on Sunday, created a political furor just as representatives of the country’s eurozone creditors were arriving in Athens for talks on a new program intended to keep Greece in the eurozone. | Publication of the recording, whose contents were reported by the Greek daily newspaper Kathimerini on Sunday, created a political furor just as representatives of the country’s eurozone creditors were arriving in Athens for talks on a new program intended to keep Greece in the eurozone. |
| European leaders have been speaking with increasing frankness about the possibility that Greece could leave the euro, a topic once considered taboo. Wolfgang Schäuble, the German finance minister, had openly discussed the idea that Greece would temporarily drop out of the currency bloc, but the proposal was rejected by Angela Merkel, the German chancellor. | European leaders have been speaking with increasing frankness about the possibility that Greece could leave the euro, a topic once considered taboo. Wolfgang Schäuble, the German finance minister, had openly discussed the idea that Greece would temporarily drop out of the currency bloc, but the proposal was rejected by Angela Merkel, the German chancellor. |
| A top official at the European Central Bank expressed dismay at the behavior of political leaders, saying they had put their national political interests above the interests of the eurozone. “The Greek crisis has let the genie out of the bottle regarding countries leaving the euro area, and it will not be easy to put it back in again,” Benoît Cœuré, a member of the executive board of the central bank, said in an interview published Monday by the French newspaper Le Monde. | A top official at the European Central Bank expressed dismay at the behavior of political leaders, saying they had put their national political interests above the interests of the eurozone. “The Greek crisis has let the genie out of the bottle regarding countries leaving the euro area, and it will not be easy to put it back in again,” Benoît Cœuré, a member of the executive board of the central bank, said in an interview published Monday by the French newspaper Le Monde. |
| The head of the European Central Bank’s mission to Greece was on his way to Athens on Monday, while the head of mission for the International Monetary Fund was expected to be there by Wednesday at the latest, according to two people with knowledge of the discussions. | The head of the European Central Bank’s mission to Greece was on his way to Athens on Monday, while the head of mission for the International Monetary Fund was expected to be there by Wednesday at the latest, according to two people with knowledge of the discussions. |
| Greece is under pressure to agree on a new aid program before Aug. 20, when the country must make a payment of 3.2 billion euros on bonds held by the central bank. But Mr. Tsipras faces revolt within his own party over conditions that other eurozone countries are demanding in return for 86 billion euros in new financing. | Greece is under pressure to agree on a new aid program before Aug. 20, when the country must make a payment of 3.2 billion euros on bonds held by the central bank. But Mr. Tsipras faces revolt within his own party over conditions that other eurozone countries are demanding in return for 86 billion euros in new financing. |
| Mr. Tsipras has been able to pass legislation demanded by creditors only with the help of opposition parties. But the controversy about a eurozone exit plan added tension to an already uneasy alliance. | Mr. Tsipras has been able to pass legislation demanded by creditors only with the help of opposition parties. But the controversy about a eurozone exit plan added tension to an already uneasy alliance. |
| On Monday, a group of 24 lawmakers from the main conservative opposition party, New Democracy, asked Mr. Tsipras to clarify whether he had been aware of the plan to create a new currency. They also suggested that Mr. Varoufakis, who resigned earlier this month, should face investigation. | On Monday, a group of 24 lawmakers from the main conservative opposition party, New Democracy, asked Mr. Tsipras to clarify whether he had been aware of the plan to create a new currency. They also suggested that Mr. Varoufakis, who resigned earlier this month, should face investigation. |
| In the recording published Monday by the Official Monetary and Financial Institutions Forum in London, Mr. Varoufakis said that beginning in December he convened a team of five people who tried to work out how Greece might drop out of the eurozone and create its own currency. Mr. Varoufakis had previously spoken about contingency plans for a euro exit, but never in as much detail. | In the recording published Monday by the Official Monetary and Financial Institutions Forum in London, Mr. Varoufakis said that beginning in December he convened a team of five people who tried to work out how Greece might drop out of the eurozone and create its own currency. Mr. Varoufakis had previously spoken about contingency plans for a euro exit, but never in as much detail. |
| On the assumption that Greek banks would be closed, the plan called for the government to set up an alternative electronic payment system by piggybacking on a system already used by the country’s tax authority to collect tax revenue. As part of the preparations, a member of Mr. Varoufakis’ team hacked into the tax authority’s computer system and copied the software code; the head of the tax authority was considered close to European authorities in Brussels, and Mr. Varoufakis didn’t want to alert her to the plan. | |
| “That would have created a parallel banking system while the banks were shut,” Mr. Varoufakis said on the call. The system would be “euro-denominated but at the drop of a hat it could be converted into a new drachma.” | “That would have created a parallel banking system while the banks were shut,” Mr. Varoufakis said on the call. The system would be “euro-denominated but at the drop of a hat it could be converted into a new drachma.” |
| On Monday, Mr. Varoufakis and the Greek government portrayed the work as a response to the possibility that Greece would be pushed out of the euro. | On Monday, Mr. Varoufakis and the Greek government portrayed the work as a response to the possibility that Greece would be pushed out of the euro. |
| “Greece’s Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans,” Mr. Varoufakis said in a statement on his blog. | “Greece’s Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans,” Mr. Varoufakis said in a statement on his blog. |
| “There was never any discussion by the government of any policy foreseeing an exit from the euro,” an official in the office of Mr. Tsipras said on Monday. “The only thing there was was a study of the repercussions in the event of a Grexit,” the official said, using common shorthand for a Greek exit from the eurozone. | “There was never any discussion by the government of any policy foreseeing an exit from the euro,” an official in the office of Mr. Tsipras said on Monday. “The only thing there was was a study of the repercussions in the event of a Grexit,” the official said, using common shorthand for a Greek exit from the eurozone. |
| One member of Mr. Varoufakis’ team was James K. Galbraith, a professor at the University of Texas at Austin. He backed up that position. | One member of Mr. Varoufakis’ team was James K. Galbraith, a professor at the University of Texas at Austin. He backed up that position. |
| “At no time was the working group engaged in advocating exit or any policy choice,” Mr. Galbraith said in a statement on Mr. Varoufakis’ website. “The job was strictly to study the operational issues that would arise if Greece were forced to issue scrip or if it were forced out of the euro.” | “At no time was the working group engaged in advocating exit or any policy choice,” Mr. Galbraith said in a statement on Mr. Varoufakis’ website. “The job was strictly to study the operational issues that would arise if Greece were forced to issue scrip or if it were forced out of the euro.” |